Coalition promise hits hurdle

Jillian Broadbent, CEFC chairman ... wrote to Tony Abbott just after the election was called, saying under the act, it was “not improper” for the CEFC to continue its operations.
Photo: Nic Walker

by
Phillip Coorey | Marcus Priest

The Abbott government’s plans to abolish the
Clean Energy Finance Corporation
could spark a legal battle with green groups and force the resignation of the CEFC board.

Green groups are considering court action, and the CEFC itself has sought advice, which casts doubt on whether it can legally comply with an interim directive to cease operations.

It has also emerged that during the election campaign, the CEFC offered the Abbott Coalition a compromise in which it would continue to invest in clean energy projects, consistent with the Coalition’s Direct Action climate ­policy, but received no response.

After being sworn in on Wednesday, Prime Minister
Tony Abbott
, as a priority, ordered the drafting of legislation to repeal the carbon tax to abolish the CEFC, a $10 billion statutory authority that provides loans to develop clean-energy projects.

The CEFC was funded from revenue raised by the carbon tax and the Coalition counted its abolition as a $545 million budget saving.

Related Quotes

Company Profile

The CEFC must be abolished by legislation and, in the interim, its board has been instructed by Treasurer
Joe Hockey
to “suspend operations and cease making payments".

Labor, Greens refuse to pass legislation

Labor and the Greens will refuse to pass the legislation in the Senate ­abolishing both the carbon price and the CEFC, meaning Mr Abbott must wait until at least July 1, 2014, when the new Senate comes in, to pass the bills.

Greens leader
Christine Milne
furnished advice before the election which says the body can only be made to stop operating by legislation and “a minister who declined to carry out a statutory function, and whose action effectively prevented statutory bodies from carrying out their statutory functions, contrary to the will of the Parliament, would risk serious legal consequences, in addition to any legal action that could arise if lack of funding led to defaulting on specific contracts".

CEFC chairman
Jillian Broadbent
wrote to Mr Abbott on August 5, just after the election was called, saying under the act, it was “not improper" for the CEFC to continue its operations “and apply the law as is presently in force". Ms Broadbent said during the caretaker period of the campaign, the CEFC would not approve new investments but would “continue to fulfil its obligations in meeting its existing legal and contractual obligations, including in relation to payments".

But she added that if Mr Abbott won the election, the CEFC would consult first “in the context of the legislative framework prior to undertaking any further action", a sign it would cede to pragmatism.

Later in the campaign the CEFC wrote again to Mr Abbott offering the compromise but received no response. The Australian Financial Review has learned the CEFC has obtained legal advice from a senior counsel that, until legislation is passed, board members could be in breach of the act if they fail to perform their statutory function to invest in clean-energy projects. Under the act, the CEFC is “required to invest in clean energy technologies".

“My understanding was, that if they were directed by the new government that they couldn’t make any new investments, the view was that the board could no longer function in accordance with the legislation and they would have to step down," climate change head Elisa de Wit at law firm Norton Rose ­Fulbright said.

The Australian Conservation Foundation’s Don Henry said his group and others were “having a close look at the legal issues behind this but, prima facie, we think this body should keep operating until the Parliament thinks otherwise". A former cabinet minister said Labor would not roll over in the Senate.

“Given how Abbott treated us, we have no reason to go soft on them in the Senate at all," the former minister said.

He said Mr Abbott would be at the mercy of the eclectic new Senate.

“If we looked bad having to negotiate with Tony Windsor and Rob Oakeshott, how bad is he going to look?"